#Budget2020: Here is what the startups get!

consolidation , M and A, Startups

Finance Minister Nirmala Sitharaman in her budget speech on Saturday proposed various incentives for startups such as relaxation of taxes levied on employee stock ownership plans (ESOPs), early-stage fund and tax rebates.

The minister proposed deferring the tax payment by five years, or until employees leave the company, or when they sell their shares depending on which is earlier. ESOPs are an important tool for employees and for startups in the initial years.

ALSO READ:#Budget2020: Here are the key takeaways from FM’s speech

A startup that is eligible and has an annual turnover of up to 25 crores to be allowed a deduction of 100% of its profits for three consecutive years out of the first seven years. However, in case a startup’s total turnover exceeds 25 crores in a year, Sitharaman proposed increasing the turnover limit from the existing 25 crores to 100 crores.

“Moreover, considering that during the initial years a startup may not have adequate profits to avail this deduction, I propose to extent the period of claim of deduction from the existing 7 years to 10 years,” Sitharaman said during the Budget session that started on Friday.

The government will also provide seed funding to encourage the development of early-stage startups in India.

The minister also said the government will set up a digital platform to ease the registration of Intellectual Property Rights for entrepreneurs and startups.

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